We talk a lot about creating the life in medicine you want on your terms. Many members of our online physician community are interested in shifting practice environments and exploring private practice, but may not be interested in a conventional insurance based private practice with many physicians. This may be because they want a smaller practice with more flexibility, because the prospect of taking on a lot of debt to start a larger practice from the getgo may be too daunting or risky, or because they may not have access to the capital necessary to start a private practice. Additionally, some physicians are not ready to commit full-time outside of their regular clinical job, but want to start a small practice on the side. One of the biggest benefits of a micropractice is that as you don’t mind getting involved in every aspect of running the practice, it is possible to keep costs so low that you truly can practice as much or as little as you want. Starting and running a micropractice can be a great way to enjoy the pros of private practice while keeping overhead costs low, and many physicians choose to stay in this model for the long haul. Below, we guide you through what to expect when opening a micropractice and how to get started.
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What is a medical micropractice?
A micropractice is a small scale private practice, where you can provide a full suite of services, but with limited or no additional staff and by minimizing overhead. As staffing is frequently the highest contributor to overhead in many practices, by limiting staffing compared to a traditional private practice, a micropractice can keep operating costs lower. This will not only make it possible to have to see less patients to be more profitable, but can help optimize your potential income as a physician entrepreneur.
As long as you don’t mind handling multiple responsibilities on top of your clinical role treating patients, much more of the money that you receive for your services will end up in your pocket in a micropractice setting. You will handle many of the other aspects of daily operations that are typically covered by other personnel at larger practices. This could include performing roles that a front desk assistant, practice manager, billing and coding department, and even the cleaners may perform, such as:
Checking patients in and collecting payments
Paying practice bills
Handling the processing of payroll
Cleaning the office
IT for computers/equipment
Bookkeeping
Scheduling
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Advantages of a micropractice
As alluded to above, the pros to a micropractice include:
Minimal overhead operating costs. As alluded to above, by keeping staff to a minimum and taking on multiple roles yourself, you can reduce your practice overhead.
Potential for a higher ROI. By keeping operating expenses to a minimum, you can keep more of the revenue you generate as profits to provide a higher salary/income.
High flexibility. With a micropractice, you have complete control over the practice, providing the flexibility to start a full-time micropractice or to practice as a physician side gig. You can set your hours and schedule around your life and terms.
Full autonomy. You also have complete control over decision making at the practice.
Lower financial barrier to entry. Starting a traditional private practice can cost hundreds of thousands depending on your scale. By starting small with a micropractice, you can minimize your upfront capital requirement, which can allow you to transition to private practice sooner and grow along the way.
Disadvantages of a micropractice
Of course, as with any practice environment, there are also cons to a micropractice, including:
Increased administrative burden. By trading your time and energy to minimize overhead, you assume the day-to-day responsibilities of running a business that additional staff would otherwise cover for you. Some doctors prefer to stick to the clinical aspect of medicine, or find that it is more profitable even if running a larger payroll.
Financial risk. While a micropractice requires less startup capital than a traditional private practice, there is still an upfront investment required to starting a practice, which comes with inherent risks. Below, we discuss how to get your micropractice up and running to help keep this as low as possible.
Less day to day support. While a micropractice can offer high flexibility and autonomy, you lose the support of additional staff. If your micropractice offers concierge services, for example, you may have more on-call responsibilities and less flexibility than you’d prefer. Running a micropractice can also limit your patient volume as you grow, as you won’t have additional staff to help patient intake, scheduling follow ups, etc.
Limited scalability at first. With a micropractice, you can only juggle so much. The more you do by yourself, the more you increase your chances of physician burnout. This can limit your potential income until you’re ready to scale up your micropractice, depending on your goals with the practice.
Keyperson risk. One of the biggest risks in running a solo practice, especially as a micropractice, is that everything comes to a halt if you are not able to do your job. If you have a personal emergency, get sick, or otherwise need a vacation or break, there may be nobody else to maintain operations in the interim. While your overhead is low, it will still need to be paid, and you may have to make other arrangements for your patients, running the risk of losing them. Some doctors running micropractices have backup plans in place for this scenario with other colleagues or offices.
Starting a micropractice
A micropractice has a lot of overlap with starting a private practice, with the notable exception of interviewing and hiring staff.
As part of your preparation, make sure you run a business proforma considering the following:
What business model do you want to run? Telemedicine only? Hybrid? Insurance-based or cash pay? Do you want to do direct primary care or offer concierge services?
What is the demand for your services? Analyze your competition in the current market to help you determine what niche you can fill.
What is your budget? How much capital do you already have, and how much will you need to secure?
What services do you want to provide? In addition to standard patient appointments, do you want to offer additional ancillary services to potentially add additional income? What are the financial implications of these potential services you’re considering? Some you can easily add without a large upfront overhead cost, like offering cash-pay labs for cash pay or HDHP patients. Others, such as imaging services, take significant capital for equipment.
What schedule will you offer? Do you plan to run a traditional practice with Monday-Friday day hours, extended hours after work or weekends for cash pay patients? Putting together your patient scheduling template can help you determine your potential proforma based on how many patients you’ll see a day.
Once you have a solid business proforma, you can secure any financing required and continue with the next logistics for your micropractice, including marketing, choosing a location, and setting up your practice.
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As you plan your micropractice, don’t forget to check any restrictions you might have in place that can impact your pro forma. For a side gig micropractice in particular, start with double checking the noncompete clause of your employment agreement. While a micropractice can be a great way to bring in additional income, you don’t want to jeopardize your steady income. If you, like many physicians, have a noncompete clause, and you aren’t sure if your planned micropractice will break the terms of your agreement, a local contract attorney can review and assess your noncompete.
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Choosing a location for your micropractice
Location, location, location is as important for a practice as in real estate. As you prepare to open your micropractice, research where your target patient population is.
Assessing cost is critical when determining your location for hybrid or in-person services. We’ve covered choosing a location for your private practice in more depth separately. For the TL;DR:
For a micropractice, you may not need a dedicated office building that you lease directly. You may want to consider subleasing space from another practice instead. This could have an added benefit of potentially providing a referral relationship, depending on their specialty.
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If you’re providing telemedicine services only, you’ll want to make sure you have a platform that is reliable and easy to use, and where patients can easily find you. Having a robust marketing plan for your practice can help here.
Preparing your micropractice for opening day
There are two primary types of logistics for getting a micropractice up and running: the practice itself to see patients, and the business side of a practice with the legal entity formation.
Setting up the business side of your micropractice
There are several types of entities you can run your micropractice through. An LLC (limited liability corporation) is a common one, as it offers a lot of flexibility, which can be useful as your micropractice grows and scales. But an LLC isn’t always necessarily the best fit, particularly if your state requires that you have a PLLC, or if it makes more sense to set up as an S-corp for tax reasons. An attorney and/or a qualified tax professional can help you choose the right entity and can ensure you cover all the legal paperwork and reporting requirements, such as the Beneficial Ownership Information (BOI) report filing requirement.
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Along with the entity structure, you’ll want to assess credentialing and licensing needs. If you’re looking at starting a telemedicine micropractice, it can be beneficial to get licensed in several states, especially through the Interstate Medical Licensure Compact (IMLC) to widen your target patient population.
If you’re planning on offering cash pay services only, credentialing may not be a concern. But if you’re hoping to open a more traditional clinical micropractice that accepts insurance, credentialing can take a while, so it’s worth getting started early.
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If you’re doing a micropractice as a side gig and won’t have a brick and mortar office location, you likely won’t want to list your physical address. Consider getting a post mail box you can use as your legal business entity.
In-person or virtual, you likely won’t want your cell phone number out there as the primary point of contact. A separate virtual phone number, such as a Google Voice number, can offer additional privacy while still minimizing overhead costs of getting a second cell phone or business lines.
Preparing for the opening of your micropractice
There are many decisions to make when preparing to open your micropractice.
Equipment. Many physicians who have started micropractices point to equipment as an important consideration in your pro forma. Additional equipment can add potential ancillary income, but this might not be the best strategy from the start. Assessing new versus used equipment can make a large difference as well. Opting for used equipment when possible can vastly reduce your startup costs. Remember, you can always scale later as your micropractice grows.
Determine what to outsource. While a micropractice won’t have full-time staff, there may be some (or many) administrative duties that you’d prefer to outsource in a cost-efficient manner until you’re ready to scale. Utilizing health tech solutions can also help you create a more efficient micropractice.
Common services that physicians consider outsourcing include front desk operations, billing and coding, marketing, accounting, and administrative tasks. A virtual employee can be a great addition to a micropractice to help reduce the administrative burden while keeping staffing costs significantly reduced. You can start with a part-time virtual assistant and scale up as your micropractice grows. While a full-service billing and coding service might not make sense when you’re getting your micropractice off the ground, you may be able to outsource some of this work to a VA as well.
An AI scribing service can also be immensely helpful for charting without having to hire a medical assistant for your micropractice.
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Set up your insurance coverage. Don’t forget to get any necessary business coverage as you set up your micropractice. Most notably, you’ll want to make sure you have proper malpractice insurance coverage in place. Having coverage through your employer for your primary job doesn’t mean you’re automatically covered for any additional work you do outside their setting. Malpractice insurance can be expensive, especially for a micropractice, but there are unique solutions specially designed for the micropractice setting to again help minimize overhead expenses at the start. As your micropractice grows, you can explore other malpractice insurance resources for doctors.
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You may need additional insurance as well, depending on your scale, such as general liability insurance and health insurance.
Marketing your micropractice to get patients
You want to build a good reputation to grow your micropractice. There are several different ways to market your micropractice, and we’ve covered them in depth in our guide to marketing a private practice.
If you are branching out into a micropractice to replace your previous clinical job, one of the best ways to market your micropractice is to your current patients (especially the ones you’d love to keep on your roster). As we mentioned above though, be careful of any noncompete or nonsolicitation clauses in place by reviewing your termination clauses as you navigate this potential marketing strategy.
You’ll want to make it easy for prospective patients, both current and new, to know where you’re going and how to reach you there. This is true for both telemedicine and in-person micropractices. Every micropractice should have a website. Business cards and even a brochure detailing the services you’ll be providing can be useful to have on hand as well.
Along with keeping your current patient roster, consider your referral networks. Try to keep your referral base from specialists if at all possible as well. If you’re just starting out, or hoping to grow, it can be worth the time investment to network with colleagues in your area to build those relationships up for future referrals. Your business cards and brochures can help here.
Along with an online presence with a website, you want to be easily searchable online when physicians are looking for recommendations for doctors in their local area. Digital marketing can help your Google ranking, as can taking the time to make sure your micropractice is even listed and searchable with Google. As your micropractice opens and grows, pay attention to patient reviews online, as these can heavily factor into referrals from your online presence.
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Collecting payments for your micropractice
Before you schedule your first patient, you’ll want to make sure you’re set up to easily collect payments. Whether you’re cash-pay or insurance-based, ensure you’re billing correctly and tracking payments to keep expected cashflow coming in.
Credit card processing is an easy and convenient way to collect payments, but it isn’t always the cheapest option, especially for a micropractice. Credit card fees can often be ~3% or more of a transaction, so offering patients alternatives can be a great way to reduce overhead costs. Let patients know ahead of their appointment if you prefer physical cash payments or checks so that they can come prepared. Cash apps such as Venmo and Zelle can be an easy way to collect payments for a micropractice as well.
Make sure you collect copays and deductibles (or visit costs for cash-pay services) up front. It’s much easier to track down and adjust payments later than to chase after patients, especially new ones, from the start. As we mentioned above, a virtual assistant may be able to help you with billing, coding, and accounts receivables.
Whatever system you put in place, make sure you have a corresponding accounting system in place. This will keep your receivables tighter, help you determine your estimated quarterly taxes, and make it easier to file your tax return.
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Conclusion
Starting a micropractice as either a side gig or a way to branch into private practice full time is an exciting opportunity. We hope the guidance above helps you determine ways you can minimize your upfront startup costs to keep your overhead low, allowing you to maximize potential profits. As you find success with your micropractice, you always have the opportunity to expand and grow intentionally.
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